CANADA FX DEBT-C$ softens as greenback rises on data, yuan calm

Reuters Staff

3 Min Read

* Canadian dollar at C$1.3047 or 76.65 U.S. cents
* Bond prices mixed across the maturity curve
TORONTO, Aug 13 (Reuters) - The Canadian dollar softened
against a rebounding U.S. currency on Thursday as economic data
helped drive the greenback higher and as China soothed concern
that its devaluation of the yuan might spur a currency war.
Another retreat in oil prices added to the pressure on the
loonie with Canada being a major oil exporter.
The People's Bank of China said it would now calculate the
daily yuan fix by taking more notice of market forces and that
it saw no basis for further depreciation. It also reassured
markets that it would step in to stabilize prices.
In the United States, upbeat retail sales data helped
reaffirm expectations that the Federal Reserve could start
raising interest rates as early as next month. Global markets
have been anxious about the possibility that the falling yuan
could derail the U.S. central bank's policy plans.
* At 9:29 a.m. EDT (1329 GMT), the Canadian dollar
was at C$1.3047 to the greenback, or 76.65 U.S. cents, weaker
than the Bank of Canada's official close on Wednesday of
C$1.2973, or 77.08 U.S. cents.
* The loonie, which was weaker than many of its key currency
counterparts, remained range-bound, trading between $1.2960 and
C$1.3064 on Thursday.
* U.S. retail sales rebounded 0.6 percent in July from June,
which was also revised higher, as households boosted purchases
of automobiles and a range of other goods. Economists polled by
Reuters had forecast a 0.5 percent rise in July.
* The number of Americans filing new applications for
unemployment benefits unexpectedly rose by 5,000 last week to a
seasonally adjusted 274,000, though the trend continued to point
to a strengthening labor market. Meanwhile, U.S. import prices
dropped 0.9 percent last month, their biggest decline in six
months as the cost of petroleum products and other goods fell.
The data suggested inflation would remain tame for a while.
* U.S. crude prices were down 1.04 percent at $42.85
a barrel, while Brent crude lost 0.44 percent to
$49.44.
* Canadian government bond prices were mixed across the
maturity curve, with longer-term bonds falling. The two-year
price fell 4 Canadian cents to yield 0.441 percent
and the benchmark 10-year slid 15 Canadian cents to
yield 1.416 percent.
* The Canada-U.S. two-year bond spread was -26.4 basis
points, while the 10-year spread was -75.8 basis points.
(Reporting by Solarina Ho; Editing by Peter Galloway)